Programming Your Digital Platform

Financial services have reached a point in the industry’s digital transformation movement where firms are no longer asking “Do I need to a digital platform?” In crossing that divide advisors and institutions are discovering that simple market commentary and product updates are not enough. One of the benefits of a digital platform is it allows advisors to create the on-demand, personalized interactions that clients are asking for, giving them context for their concerns and better supports why they should continue to entrust an advisor with their assets. An added benefit of a digital platform is that it creates a valuable audit trail, giving the advisor the ability to track every conversation and transaction within a client portal and advisor portal. Businesses can’t improve what they can’t measure and enhancing the reach and range of your digital content and financial mobility can significantly improve the effectiveness of your digital message. IBM’s CEO Ginni Rometty said at the 2016 Code Conference in Rancho Palos Verdes, Calif. “I don’t think anybody’s just B2B or B2C anymore. You are B2I—business to individual”

A good reference point for what that content might look like is the annual Global Survey of Individual Investors from Natixis Global Asset Management. The firm recently released its fifth-annual survey, which had participation from 7,100 investors in 22 countries. The current survey, which only polls investors with $200,000 or more in investable assets, offers some interesting insights about the disconnect between investor expectations and the messages that advisors are delivering. Encouragingly, the survey indicated that a clear majority of investors continue to believe that the services of advisors are valuable and worth the fees charged. However, these same investors graded their advisors poorly in terms of meeting their client communications expectations. Clients are busy and expect advisors to tell the right story on their terms, and on the device of their choice. The cross-town, mid-day quarterly meeting is no longer the preferred option for meeting with clients instead they would prefer a client portal.

Should I Stay or Should I Go

While 41% of survey respondents who ended their advisory relationship cited investment performance as the reason for leaving, the majority of grievances stemmed from poor client communication with their advisor through a client portal and an advisor portal. 32% chose to end their advisory relationship because they felt their advisor failed to understand their savings and investment goals, while 30% felt their investment views differed from those of their advisor.  Although advisors have limited control over investment performance, they can leverage a digital platform to increase client communication and client reporting, helping to reduce the number of clients leaving for reasons other than market performance. Planning and relationship based services are exactly the type of advice a client communications platform can address. Quarterly investment performance is not the only focus of clients today which is why a client communications strategy focused on individualized and curated content is key to continually providing new value to clients.

Information Overload

The Natixis survey identified two focal points for addressing this communication gap. The first was client confusion due to information overload. Advisors often communicate in a vacuum and forget clients pay for advice to simplify their lives, not to know how smart their advisors claim to be. The noise of the financial media needs to be taken into consideration. The second theme was an expressed desire to have better education and self-service tools to answer the simple questions. According to the survey clients are looking for resources to “become stronger, more confident investors.” Clients said what they wanted most “is help with making more informed investment decisions.” They do not want to become DIY investors, they want shared responsibility and validation.

Alpha Beta Breakdown

One revealing disconnect was how investors worldwide have bought into the orthodoxy of passive investing.  According to John Hailer, CEO of Natixis, the majority of retail investors now believe that index funds not only offer better diversification but that they also reduce absolute risk and costs. According to Hailer, “It’s troubling to see investors mistakenly assign benefits to index funds that they don’t actually have. Index funds have a place in portfolios, but their low cost seems to be providing a ‘halo effect’ that could blind-side investors during volatile markets.” If advisors believe that active strategies can generate alpha through research and position concentration, the communication strategy should be communicating the benefits of your approach more clearly and with less technical jargon. Advisors will have to work harder to explain and validate the investment approach. Alternatively, if the advice strategy is offering a broadly diversified passive approach, the digital output should consist of broad market themes specific to client’s investments and not a focus on individual financials or corporate micro themes. The Investment strategy should partially drive the client communications strategy. Buying a plane ticket from an online travel website doesn’t mean that traveler is also interested in road conditions and highway routes.

Keeping It Personal

The clear takeaway from clients is that the client communications and client reporting strategies from independent and institutional advice firms need to be more personal, educational and contextual. Clients are looking to partner with advisors, finding a middle ground between an automated robo service and a more traditional, pre-digital advisor that shares updates on a quarterly basis. A well-executed client communication and client reporting strategy leads to more educated clients, which in turn creates a client base that not only feels like they are involved with the process, but they will be less likely to respond to emotional whims during a market downturn. One of the key values of the InvestCloud digital platform is that it enables a firm to design and efficiently deliver custom client content at the right time with the right message on the right device. With the InvestCloud digital platform, advisors will be able to insure that clients are seeing the most relevant messaging they need rather than the distracting noise of the market in their client portal.

About InvestCloud Inc.

Headquartered in Los Angeles, InvestCloud empowers investors and managers with a single version of the integrated truth through its unique digital platform. Today the InvestCloud platform supports over $1.7 trillion of assets across 670 institutional customers. InvestCloud creates custom solutions for better decision-making. From Client Communications (Client Portals and Client Reporting) and Client Management (Advisor Portals) to Digital Warehousing, Data Analytics and Accounting, InvestCloud offers first-class digital investment platforms for successful investing that are rapid to deploy and hyper-modular apps. Customer segments include wealth managers, institutional investors, asset managers, family offices, asset services companies and financial platforms.

For more information, visit

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: